4 Ways to Invest in Your Child’s Future in 2024 and Beyond

Your money or your life? As the saying goes.  This time it’s a question of choosing between your own financial freedom, and the essential investments for your children’s future.  Why make a choice?  Why not do both? There’s no point in delaying if you really want to invest in your child’s future.  Working out your own financial salvation is also pivotal for the economic future of your family.  But you’ll need to become intentional when setting your kids up for financial freedom also.

How can I invest in my child? A common question out there, but the answer is simple.  You get started early in whatever investment(s) you choose to get a head start with the power of compound interest.  Investing for your children or with their involvement will set the stage for their future financial empowerment.

1. Teach Your Child the Right Money Mindset

It’s All About Money

The most essential way to invest in your child’s future is to cultivate that positive money mindset.  If you want your child to grow up broke, then do nothing.  The world will lead them into the cult of materialism and make them wage slaves. 

They will literally baptize each generation into the institution of debt.  They have to.  The economy needs more people who spend than save – to lubricate the greed inherent in global capitalism.  Be on the other side of that fence.  Discuss money. 

Spending Choices

Teach your children about money.  Start with the basic premise of working and earning a living.  How can I invest in my child to subvert the herd mentality? Help them understand what is required to go through life on this earth. 

Make them aware of your bills, and how you work to pay them.  They will begin to understand the basic reality of limited income.  Limited income is the resource used to settle the unlimited expenses of life.  Show them how a basic budget works.  For various age groups, just break the components down to the bare essentials.  This is another way to invest in your child’s future.

Read Next: 7 Reasons Why You Should Always Invest in Yourself

Earning a Living as Minors

How can I invest in my child to prepare him or her to start earning a living?  You can delegate this by default to the school system or you could take the bull by its horns.  Give them chores and assignments.  Start paying those allowances based on their effort.  Show them what they’ll have to do to earn extra an extra bonus. 

Of course, you want to do this within some limits.  We’re not exploiting these kids.  We simply want to place vital psychological blueprints of work/reward into them.  You’re simply teaching them about the reality of money.  They can work as baby-sitters, mowing lawns, raking leaves.  These habits invest in your child’s future career choices also.

Earning a Living as Teens

How can I invest in my child who is a teen with this rule?  These values may be a bit harder to teach to teens who’ve already fallen into the materialistic mindset.  As they’re nearly adults, give them non-fiction books about financial empowerment.  Gifting them stocks may eventually lead to its’ liquidation.  Gift cards certainly will not foster the resolve we’re looking for.

If you had your own way, you would spoil your little angels wouldn’t you?  I bet you want to give them a better life than you had.  But that is the whole point of this exercise.  We end up doing the exact opposite unconsciously.  We don’t want to be criticized for child labor either, but we have to be decisive about this.

Avoid Over-Sheltering

To invest in your child’s future, consider also the mistakes of others.  In the book, The Millionaire Next Door, a lot of affluent folks who strove in life to build businesses are giving their children the easy life.  Failing to instill the same virtues that made them rich, they set up their kids to expect big inheritances.  They pursue advanced degrees for a life-long career in the 9-5 world until they’re 65.  And during mid-life crisis, they revert to their parents for bailouts.

2. Using Savings, How Can You Invest In Your Child’s Future?

Teach your children how to save money.  You’d have to be intentional about this.  We were all taught how to get what we want.  All we had to do was ask, yell, or cry.  And we got it – easy!  So to help your child understand the idea of saving money, demonstrate how a $5 or $20 gift could be used.

Show them the simplistic process of having money compound slowly in a savings account.  Then go a step further to explain why a money market investment such as a Certificate of Deposit (CD) could be a better option.  Finally, include the high growth potentials of equity investments (Stocks, ETFs, etc) and their inherent risks.

They will beam with smiles.  But apply the above process in a phase of several years.  This is not just a one day chat with the kiddo.  Make it consistent as they progress through the years to invest in your child’s future until they’re adults.

3. Using Investing, How Can You Invest In Your Child’s Future?

Once that basic premise of saving has been established, teach them how to invest.  If you’re still asking, how can I invest in my child through custodial based investments?  Consider this.  Children have a fantastic propensity for imagination.  Make it known to them that they can have more tomorrow when they forgo the purchases of today. 

As they learn to save, they’ll be ready to start investing.  They can own shares in Hasbro, Mattel, Disney, or EA Electronic Arts.  Tell them how many units (sales) these businesses sell per day, and see if that wouldn’t open up their curiosity to invest even the more.

4. Invest in Your Child’s Future Using a Custodial Roth IRA

Custodial Roth IRA, as the name suggests is basically a tax free retirement account.  Your child is the owner and beneficiary.  The account matures when they turn 59.5 years.  They’ll be the ultimate beneficiary of this account.  This account will be managed by the adult custodian (you) on their behalf.  Your child will have full control after the age of maturity (18 years in some US states).

How can I invest in my child using a Custodial Roth IRA? Simple! Your kid is the underlying owner of the account with their own social security number.  You will choose and manage investments on their behalf.  The basic rule for this account is that the child must have earned income.  This could be through some commercial activity such as modeling, acting, etc.  They’ll to be able to make contributions thereafter.

This is a great opportunity to engage them in the investment selection and management process.  They will see frequent dividends coming in and this will keep them motivated and exited.  They will continue to nurture this account as adults and achieve amazing compound interest results.

Sage Topic Family:

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• 4 Ways to Invest in Your Child’s Future
• Should Schools Teach Financial Literacy for Kids?

A Few Parting Words

If you’re read this far, then you’re ready to invest in your child’s future.  These ideas are simple yet require a decisive approach.   The habits outlined will build financial confidence.  It’s really the little things that add up.  You don’t have to be fancy with elaborate goals or hiring financial advisors.  Just take the plunge and invest psychologically, emotionally, as well as financial in the next generation.

Your selection of investments should be basic.  After a while you can add a variety of financial assets in the pool.  The portfolio can range from money market instruments like Certificates of Deposits (CDs), Exchange Traded Funds (ETFs), dividend stocks, as well as fun stocks of toy companies and sports brands the kids love.

Have you begun the journey to invest in your child’s future yet? Please share some tips on the selection of investments, and the level of direct involvement of the whole family – if you’re married or single.

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